MANU/SC/0378/1970

Equivalent Citation: AIR1970SC 1407, [1970(20)FLR399], (1970)IILLJ266SC , (1970)1SC C 735, [1971]1SC R177

IN THE SUPREME COURT OF INDIA

Civil Appeal Nos. 1705 of 1969
Decided On: 01.01.1970
Appellants:The Management of Safdarjung Hospital, New Delhi
Vs.
Respondent:Kuldip Singh Sethi
Hon'ble Judges/Coram:
M. Hidayatullah, C.J., A.N. Grover, A.N. Ray, I.D. Dua, J.C. Shah and K.S. Hegde, JJ.
Counsels:
For Appellant/Petitioner/Plaintiff: A.K. Sen, S.P. Nayar, H.R. Gokhale, Jitendra
Mahajan and Madan Mohan, Advs
For Respondents/Defendant: M.K. Ramamurthi, E.C. Agarwala, R.P. Agarwala, M.V.
Goswami, and P.N. Tewari, Advs.
Overruled / Reversed by:
Bangalore Water Supply and Sewerage Board vs. A. Rajappa and Ors.,
MANU/SC/0257/1978

JUDGMENT
M. Hidayatullah, C.J.
1. This judgment will dispose of Civil Appeals Nos. 1705 of 1969, 1781 of 1969 and
1777 of 1969. The first is an appeal by the Management of Safdarjung Hospital, New
Delhi. The second by the Management of Tuberculosis Hospital, New Delhi and the
third by the Kurji Holy Family. Hospital, Patna. The first two are filed by special leave
and the third by certificate. They call in question respectively the order of the Central
Government Labour Court, Delhi dated 21st February, 1969 on an application under
Section 33C(2) of the Industrial Disputes Act, 1949, the order of the Presiding
Officer, Additional Industrial Tribunal, Delhi dated 24th February, 1969 and the
judgment and order dated 21st February, 1969 of the Patna High Court. They raise a
common question of law whether these several hospitals can be regarded as
industries within the meaning of the term in the Industrial Disputes Act. They also
raise different questions on merits which will be considered separately. The facts of
the three cases may be noticed briefly before we begin to examine the common
question of law mentioned above.
C.A. No. 1705 of 1969.
2 . The Management of Safdarjung Hospital, New Delhi was the respondent in a
petition under Section 33C(2) of the Industrial Disputes Act, 1947 in a petition by the
present respondent Kuldip Singh Sethi, a Lower Division Clerk in the Hospital, for
computation of the amount of salary etc. due to him in the pay scale of store
keepers. Kuldip Singh Sethi was appointed as a Store-keeper on October 26, 1956 in
the pay scale of Rs. 60--5--75. This scale was revised to Rs. 110--180 on July 1,

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1959 in accordance with the recommendations of the Second Pay Commission. Two
or three months later the pay was re-fixed and the time scale was Rs. 110--131 with
usual allowances. On July 1, 1962 his basic pay was fixed at Rs. 131. On November
26, 1962 the Government of India in the Ministry of Health re-revised the pay scales
of Storekeepers to Rs. 130--5--160--8--200--EB--8--280--10--300 with the usual
allowances. The order was to take effect from the date of issue. Kuldip Singh Sethi
complained by his petition that the Management of the Hospital had failed to give him
pay in this scale and claimed Rs. 914 for the period November 26, 1962 to May 31,
1968.
3. In reply to his petition the Management contended that Kuldip Singh Sethi was not
a workman but a Government servant governed by the Conditions of Service for
Government Servants and hence he could not invoke the Industrial Disputes Act since
the Safdarjung Hospital was not an industry. The Tribunal, following the decision of
this Court in State of Bombay v. Hospital Ma-door Sabha has held that the Hospital is
an 'industry', that Kuldip Singh Sethi is a 'workman' and hence he is entitled to take
recourse to Section 33C(2) of the Industrial Disputes Act. On merits his claim is
found sustainable and he is given an award for Rs. 914. We need not mention at this
stage the grounds on which the merits of his claim are resisted. The point of law that
arises in the case is whether the Safdarjung Hospital can be properly described as an
'industry' as defined in the Industrial Disputes Act.
C.A. No. 1781 of 1969.
4 . In this case there is a dispute between the Management of the Tuberculosis
Hospital, New Delhi and its workmen represented by the Aspatal Karamchari
Panchayat regarding pay scales, and other facilities demanded by the workmen. The
Management has taken the preliminary objection that the Industrial Disputes Act does
not apply since the Hospital is not an industry and is not run as such. The
Management, therefore, questions the reference to the Tribunal under Section 10(1)
(d) of the Industrial Disputes Act. A preliminary issue is raised :
Is T.B. Hospital an industry or not ?
In support of the case that the Hospital is not an industry, the Management
emphasises the functions of the Hospital. It is pointed out that the Hospital is run by
the Tuberculosis Association of India as a research institute where training is given to
Medical graduates of the Delhi University for the D.T.C.D. and D.C.H. Courses, and
postgraduates and undergraduates of the All India Institute of Medical Sciences are
also provided training and nurses from the Delhi College of Nursing, Safdarjung,
Lady Hardinge and Holy Family Hospitals receive training. The Hospital, it is
admitted, has paid and unpaid beds but it is submitted that treatment of tuberculosis
is a part of research and training and education, and, therefore, the Hospital has
affinity to a University and not to a Hospital proper. It is, therefore, contended that
this Hospital is not an industry. The Tribunal holds that neither the research carried
on, nor the training imparted, nor the existence of the Tuberculosis Association of
India with which the Hospital is affiliated makes any difference and the case falls
within the ruling of this Court in the Hospital Mazdoor Sabha case
MANU/SC/0200/1960 : (1960)ILL J251SC . The Tribunal holds the Tuberculosis
Hospital, New Delhi to be an industry.
C.A. No. 1777 of 1969.
5 . The appeal arises from a writ petition filed in the High Court of Patna. The Kurji
Holy Family Hospital took disciplinary action against two of its employees and the
matter was taken up by the Kurji Holy Family Hospital Employees Association and the

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State of Bihar made a reference to the Labour Court, Patna under Section 10 of the
Industrial Disputes Act. Before the Tribunal, the Management of the Hospital took the
objection inter alia that a hospital was neither a trade nor a business, nor an industry
as defined in the Industrial Disputes Act and as such the provisions of the Industrial
Disputes Act were not applicable and the reference was incompetent. The High Court
holds this point against the Management, following the Hospital Mazdoor Sabha
MANU/SC/0200/1960 : (1960)ILL J251SC case. The later case of this Court reported
in Secretary, Madras Gymkhana Club Employees Union v. Management of the
Gymkhana Club MANU/SC/0227/1967 : (1967)IILL J720SC is held not to have
weakened the effect of the decision in the case relied upon.
6. It is thus that the three cases came before us and were heard together. Counsel in
these cases submit that the ruling in the Hospital Mazdoor Sabha
MANU/SC/0200/1960 : (1960)ILL J251SC case has now been considerably shaken by
the pronouncement in the Madras Gymkhana Club MANU/SC/0227/1967 :
(1967)IILL J720SC case where it was observed that the Hospital Mazdoor Sabha
MANU/SC/0200/1960 : (1960)ILL J251SC case was one which might be said to be on
the verge and that there were reasons to think that it took an extreme view of an
industry. Relying on this observation, counsel in the three appeals asked for a
reconsideration of the Hospital Mazdoor Sabha MANU/SC/0200/1960 :
(1960)ILL J251SC case although they conceded that it was not yet overruled. We
accordingly heard arguments on the general question whether a hospital can be said
to be an industry falling within the Industrial Disputes Act and under what
circumstances. We also heard arguments on the merits of the appeals to determine
whether the decisions rendered therein could be upheld even if the Hospital Mazdoor
Sabha MANU/SC/0200/1960 : (1960)ILL J251SC case was held applicable. We shall
follow the same course here. We shall first consider the general proposition whether
a hospital can be considered to fall within the concept of industry in the Industrial
Disputes Act and whether all hospitals of whatever description can be covered by the
concept or only some hospitals under special conditions. We shall then consider the
merits of the individual cases in so far as may be necessary.
7. The Industrial Disputes Act was construed in the past on more than one occasion
by this Court. A fairly comprehensive summary of the various cases with the ratio
decidendi of those cases is to be found in the Gymkhana Club MANU/SC/0227/1967 :
(1967)IILL J720SC case. The tests applied to find out whether a particular
establishment falls within the definition of 'industry' or not were not found to be
uniform and disclosed a pragmatic approach to the problem. This Court, therefore, in
Gymkhana Club MANU/SC/0227/1967 : (1967)IILL J720SC case fell back upon the
statute for guidance pointing out that they were not concerned with a popular phrase
but one which the statute had with great particularity defined itself. Examining the
content of the definitions this Court came to certain conclusions and held in their
light that a non-proprietary members' club was not an industry.
8 . The reasoning in the Gymkhana Club MANU/SC/0227/1967 : (1967)IILL J720SC
case formed the basis of an attack on the former ruling in the Hospital Mazdoor
Sabha MANU/SC/0200/1960 : (1960)ILL J251SC case by the Managements of the
three Hospitals which are appellants here. The other side relied upon the ruling and
the amendment of the Industrial Disputes Act by which 'Service in hospitals and
dispensaries' has now been added as item No. 9 in the First Schedule, as one of the
industries which may be declared to be public utility services under Sub-Clause (vi)
of Clause (n) of Section 2 of the Act. It is claimed that this is a legislative
determination of the question whether hospital is an industry or not. It has,
therefore, become necessary to cover some of the ground covered in the Gymkhana
Club MANU/SC/0227/1967 : (1967)IILL J720SC case. To begin with we may once

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again refer to the relevant definitions contained in the Act for they must necessarily
control our discussion.
9 . The Industrial Disputes Act, as its title and indeed its whole tenor disclose, was
passed to make provision for the investigation and settlement of industrial disputes
and for certain other purposes appearing in the Act. The term 'industrial dispute' is
defined by Section 2(k) in the following words :
'industrial dispute' means any dispute or difference between employers and
employers or between employers and workmen, or between workmen and
workmen, which is connected with the employment or non-employment or
the terms of employment or with the conditions of labour, of any person.
The definition discloses that disputes of particular kinds alone are regarded as
industrial disputes. It may be noticed that this definition does not refer to an
industry. But the dispute, on the grammar of the expression itself, means a dispute in
an industry and we must, therefore, turn to the definition of 'industry' in the Act. The
word is defined in Clause (j) and reads :
'industry' means any business, trade, undertaking, manufacture or calling of
employers and includes any calling, services, employment, handicraft, or
industrial occupation or avocation of workman.
This definition is in two parts. The first part says that it means any business, trade,
undertaking, manufacture or calling of employers and then goes on to say that it
includes any calling, service, employment, handicraft or industrial occupation or
avocation of workmen.
10. In dealing with this definition this Court in the Gymkhana Club [1958] 1 S.C.R.
742 case attempted to keep the two notions concerning employers and employees
apart arid gave the opinion that the denotation of the term 'industry' is to be found in
the first part relating to employers and the full connotation of the term is intended to
include the second part relating to workmen. It was, therefore, concluded:
If the activity can be described as an industry with reference to the
occupation of the employers, the ambit of the industry, under the force of the
second part, takes in the different kinds of activity of the employees
mentioned in the second part. But the second part standing alone cannot
define 'industry'. ...By the inclusive part of the definition the labour force
employed in an industry is made an integral part of the industry for purposes
of industrial disputes although industry is ordinarily something which
employers create or undertake.
11. These observations need to be somewhat qualified. It is to be noticed that this
definition modifies somewhat the definition of 'industry' in Section 4 of the
Commonwealth Conciliation and Arbitration Act 1909-1970) (Acts Nos. 13 of 1904
and 7 of 1910) of Australia where the definition reads :
'industry' means business, trade, manufacture, undertaking, calling, service
or employment, on land or water, in which persons are employed for pay,
hire, advantage or reward, excepting only persons engaged in agricultural,
viticulture , horticultural, or dairying pursuits.
Although the two definitions are worded differently the purport of both is the same. It
is not necessary to view our definition in two parts. The definition read as a whole
denotes a collective enterprise in which employers and employees are associated. It

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does not exist either by employers alone or by employees alone. It exists only when
there is a relationship between employers and employees, the former engaged in
business, trade, undertaking, manufacture or calling of employers and the latter
engaged in any calling, service, employment, handicraft or industrial occupation or
avocation. There must, therefore, be an enterprise in which the employers follow
their avocations as detailed in the definition and employ workmen who follow one of
the avocations detailed for workmen. The definition no doubt seeks to define
'industry' with reference to employers' occupation but includes the employees, for
without the two there can be no industry. An industry is only to be found when there
are employers and employees, the former relying upon the services of the latter to
fulfil their own occupations.
1 2 . But every case of employment is not necessarily productive of an industry.
Domestic employment, administrative services of public officials, service in aid of
occupations of professional men, also disclose relationship of employers and
employees but they cannot" be regarded as in the course of industry. This follows
from the definition of 'workman' in the Act defined in Clause (s) which reads:
'workman' means any person (including an apprentice) employed in any
industry to do any skilled or unskilled manual, supervisory, technical or
clerical work for hire or reward, whether the terms of employment be express
or implied, and for the purposes of any proceeding under this Act in relation
to an industrial dispute, includes any such person who has been dismissed,
discharged or retrenched in connection with, or as a consequence of, that
dispute, or whose dismissal, discharge or retrenchment has led to that
dispute, but does not include any such person --
(i) who is subject to the Army Act, 1950, or the Air Force Act, 1950
or the Navy (Discipline) Act, 1934; or
(ii) who is employed in the police service, or as an officer or other
employee of a prison; or
(iii) who is employed mainly in a managerial or administrative
capacity; or
(iv) who, being employed in a supervisory capacity, draws wages
exceeding five hundred rupees per mensem or exercises, either by
the nature of the duties attached to the office or by reason of the
powers vested in him, functions mainly of a managerial nature.
The word 'industry' in this definition must take its colour from the definition and
discloses that a workman is to be regarded as one employed in an industry if he is
following one of the vocations mentioned in conjunction with his employers engaged
in the vocations mentioned in relation to the employers.
13. Therefore an industry is to be found when the employers are carrying on any
business, trade, undertaking, manufacture or calling of employers. If they are not,
there is no industry as such. What is meant by these expressions was discussed in a
large number of cases which have been considered elaborately in the Gymkhana Club
MANU/SC/0227/1967 : (1967)IILL J720SC case. The conclusion in that case may be
stated :
Primarily, therefore, industrial disputes occur when the operation undertaken
rests upon cooperation between employers and employees with a view to
production and distribution of material goods, in other words, wealth, but

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 they may arise also in cases where the cooperation is to produce material
services. The normal cases are those in which the production or distribution
is of material goods or wealth and they will fall within the expressions trade,
business and manufacture.
The words 'trade', 'business', 'manufacture' and 'calling' were next explained thus:
The word 'trade' in this context bears the meaning which may be taken from
Halsbury's Laws of England, Third Edn. Vol. 38 p. 8--
(a) exchange of goods for goods or goods for money;
(b) any business carried on with a view to profit, whether manual, or
mercantile, as distinguished from the liberal arts or learned
professions and from agriculture; and business means an enterprise
which is an occupation as distinguished from pleasure. Manufacture
is a kind of productive industry in which the making of articles or
material (often on a large scale) is by physical labour or mechanical
power. Calling denotes the following of a profession or trade.
14. It may be added here that in National Association of Local Government Officers
v. Bolton Corporations [1943] A.C. 166. Lord Wright observes that 'trade' is a term of
the widest scope. This is true. We speak of the occupation of men in buying and
selling, barter or commerce as trade. We even speak of work, especially of skilled
work as a trade, e.g. the trade of goldsmiths. But the word as used in the statute
must be distinguished from professions although even professions have 'trade
unions'. The word 'trade' includes persons in a line of business in which persons are
employed as workmen. Business too is a word of wide import. In one sense it
includes all occupations and professions. But in the collocation of the terms and their
definitions these terms have a definite economic content of a particular type and on
the authorities of this Court have been uniformly accepted as excluding professions
and are only concerned with the production, distribution and consumption of wealth,
and the production and availability of material services. Industry has thus been
accepted to mean only trade and business, manufacture, or undertaking analogous to
trade or business for the production of material goods or wealth and material
services.
15. Why professions must be held outside the ambit of industry may be explained. A
profession ordinarily is an occupation requiring intellectual skill, often coupled with
manual skill. Thus a teacher uses purely intellectual skill while a painter uses both. In
any event, they are not engaged in an occupation in which employers and employees
co-operate in the production or sale of commodities or arrangement for their
production or sale or distribution and their services cannot be described as material
services.
1 6 . What is meant by 'material services' needs some explanation too. Material
services are not services which depend wholly or largely upon the contribution of
professional knowledge, skill or dexterity for the production of a result. Such services
being given individually and by individuals are services no doubt but not material
services. Even an establishment where many such operate cannot be said to convert
their professional services into material services. Material services involve an activity
carried on through co-operation between employers and employees to provide the
community with the use of something such as electric power, water, transportation,
mail delivery, telephones and the like. In providing these services there may be
employment of trained men and even professional men, but the emphasis is not on
what these men do but upon the productivity of a service organised as an industry

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and commercially valuable. Thus the services of professional men involving benefit to
individuals according to their needs, such as doctors, teachers, lawyers, solicitors
etc. are easily distinguishable from an activity such as transport service. The latter is
of a commercial character in which something is brought into existence quite apart
from the benefit to particular individuals. It is the production of this something which
is described as the production of material services.
17. Mr. Ramamurti arguing against the Hospitals drew our attention to Citrine's book
Trade Union Law' (3rd edn. p. 609) where the author observes:
However, whilst the words trade' and 'industry' are separately capable of a
wide interpretation, when they occur in conjunction the tendency of the
courts is to give them a narrow one.
He cites the House of Lords case to which we have referred and criticises the
tendency of the court to narrow the meaning of the expressions 'industry' and
'workman'. He says that this narrow interpretation unnecessarily excludes from
workmen 'teachers employed by local authorities, university employees, nurses and
others employed under the National Health Service, the domestic staff of the Houses
of Parliament and Civil Servants who are not employed in "trading' or 'industrial
undertaking'. He includes all these in the definitions because a person doing the
same type of work for a commercial undertaking is within the definition. According to
him any person gainfully employed must be within the definition. On the strength of
this definition Mr. Ramamurthi also contends that not the Hospital Mazdoor Sabha
MANU/SC/0200/1960 : (1960)ILL J251SC case but the earlier cases of this Court such
as University of Delhi and Anr. v. Ramnath MANU/SC/0143/1963 : (1963)IILL J335SC
and National Union of Commercial Employees v. M. R. Meher MANU/SC/0198/1961 :
[1962]44ITR6(SC) must be reconsidered and overruled.
18. The reason for these cases, as also the Gymkhana Club MANU/SC/0227/1967 :
(1967)IILL J720SC case lies in the kind of establishment with which we are
concerned. The Gymkhana Club MANU/SC/0227/1967 : (1967)IILL J720SC case of
this Court (followed and applied in Cricket Club v. Labour Union A.I.R. 1969 S.C. 276
has held that non-profit making members' clubs are not employed in trade or
industry and their employees are not entitled to engage in trade disputes with the
clubs. This view finds support from Hotel and Catering Industry Training Board and
Automobile Proprietary Ltd. (1969) 1 W.L.R. 697 H.L. S.C.; (1968) 1 W.L.R. 1526
and [1968] 3 All. E.R 399 C.A.. The Solicitors case cited by Mr. Ramamurti was so
decided because there the services rendered by the employees were in aid of
professional men and not productive of material goods or wealth or material services.
The other case of University was also decided as it was, for the same reason.
1 9 . It, therefore, follows that before an industrial dispute can be raised between
employers and their employees or between employers and employers or between
employees and employees in relation to the employment or non-employment or the
terms of employment or with the conditions of labour of any person, there must be
first established a relationship of employers and employees associating together, the
former following a trade, business, manufacture, undertaking or calling of employers
in the production of material goods and material services and the latter following any
calling, service, employment, handicraft, or industrial occupation or avocation of
workmen in aid of the employers' enterprise. It is not necessary that there must be a
profit motive but the enterprise must be analogous to trade or business in a
commercial sense.
20. We do not find it necessary to refer to the earlier cases of this Court from which

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these propositions have been deduced because they are all considered in the
Gymkhana Club case MANU/SC/0227/1967 : (1967)IILL J720SC . We accept the
conclusion in that case that:
...before the work engaged in can be described as an industry, it must bear
the definite character of 'trade' or 'business' or 'manufacture' or 'calling' or
must be capable of being described as an undertaking resulting in material
goods or material services.
21. We may now consider closely the Hospital Mazdoor Sabha MANU/SC/0200/1960
: (1960)ILL J251SC case and the reasons for which it was held that the workmen
employed in a hospital were entitled to raise an industrial dispute. We may say at
once that if a hospital, nursing home or dispensary is run as a business in a
commercial way there may be found elements of an industry there. Then the hospital
is more than a place where persons can get treated for their ailment. It becomes a
business.
22. In the Hospital Mazdoor Sabha MANU/SC/0200/1960 : (1960)ILL J251SC case,
hospitals run by Government and even by a private association, not on commercial
lines but on charitable lines or as part of the functions of Government Department of
Health were held included in the definition of industry. The reason given was that the
second part of the definition of industry contained an extension of the first part by
including other items of industry. As we have pointed out the first and the second
parts of the definition are not to be read in isolation as if they were different
industries but only as aspects of the occupation of employers and employees in an
industry. They are two counterparts in one industry. The case proceeds on the
assumption that there need not be an economic activity since employment of capital
and profit motive were considered unessential. It is an erroneous assumption that an
economic activity must be related to capital and profit-making alone. An economic
activity can exist without the presence of both. Having rejected the true test applied
in other cases before, the test applied was 'can such activity be carried on by private
individuals or group of individuals' ? Holding that a hospital could be run as a
business proposition and for profit, it was held that a hospital run by Government
without profit must bear the same character. With respect, we do not consider this to
be the right test. That test was employed to distinguish between the administrative
functions of Government and local authorities and their functions analogous to
business but it cannot be used in this context. When it was emphasised in the same
case that the activity must be analogous to business and trade and that it must be
productive of goods or their distribution or for producing material services to the
community at large or a part of it, there was no room for the other proposition that
privately run hospitals may in certain circumstances be regarded as industries. The
expression 'satisfying material human needs' was evolved which bore a different
meaning. These observations were apparently based on the observations of Isaacs
and Rich JJ. in Federated Municipal and Shire Council Employees of Australia v.
Melbourne Corporation, 26 C.L.R. 508 but they were :
Industrial disputes occur when, in relation to operations in which capital and
labour are contributed in cooperation for the, satisfaction of human wants
and desires, those engaged in co-operation dispute as to the basis to be
observed, by the parties engaged, respecting either a share of the produce or
any other terms and conditions of their co-operation. ...The question of profit
making may be important from an income-tax point of view, as in many
municipal cases in England; but, from an industrial dispute point of view, it
cannot matter whether the expenditure is met by fares from passengers or
from rates.

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The observations in the Australian case only indicate that in those activities in which
government takes to industrial ventures, the notion of profit-making and the absence
of capital in the true sense of the word are irrelevant. The passage itself shows that
industrial disputes occur in operation in which employers and employees associate to
provide what people want and desire in other words where there is production of
material goods or material services. In our judgment the Hospital Mazdoor Sabha
case took an extreme view of the matter which was not justified.
23. It is argued that after the amendment of the Industrial Disputes Act by which
'service in hospitals and dispensaries' is included in public utility services, there is no
scope for saying that hospitals are not industries. It is said that Parliament has
accepted that the definition is suited to include a hospital. This contention requires
close attention in view of the fact that it was noticed in the Hospital Mazdoor Sabha
MANU/SC/0200/1960 : (1960)ILL J251SC case although that arose before the
amendment.
24. A public utility service is defined in the Act by merely naming certain services. It
will be noticed that these services are :
(i) any railway service or any transport service for the carriage of passengers
or goods by air;
(ii) any section of any industrial establishment on the working of which the
safety of the establishment or the workmen employed therein depends;
(iii) any postal, telegraph or telephone service;
(iv) any industry which supplies power, light or water to the public;
(v) any system of public conservancy or sanitation; After naming these
services the definition adds :
(vi) any industry specified in the First Schedule which the appropriate
Government may, if satisfied that public emergency or public interest so
requires, by notification in the official gazette, declare to be a public utility
service for the purposes of this Act, for such period as may be specified in
the notification.
Provided that the period so specified shall not, in the first instance, exceed
six months but may, by a like notification, be extended from time to time, by
any period not exceeding six months, at any one time if in the opinion of the
appropriate Government public emergency or public interest requires such
extension.
25. The intention behind this provision is obviously to classify certain services as
public utility services with special protection for the continuance of those services.
The named services in the definition answer the test of an industry run on
commercial lines to produce something which the community can use. These are
brought into existence in a commercial way and are analogous to business in which
material goods are produced and distributed for consumption.
2 6 . When Parliament added the sixth clause under which other services could be
brought within the protection afforded by the Act to public utility services, it did not
intend that the entire concept of industry in the Act, could be ignored and anything
brought in. Therefore it said that an industry could be declared to be a public utility
service. But- what could be so declared had to be an industry in the first place. We

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are concerned with the addition of item 9 'service in hospitals and dispensaries'. The
heading of the First Schedule speaks again of industries which may be declared to be
public utility services. The original entries were five and they read :
1 . Transport (other than railways) for the carriage of passengers or goods,
by land, water or air (now air is omitted).
2. Coal
3. Cotton textiles.
4. Food stuffs
5. Iron and steel.
It is obvious that general headings are given here. Coal is not an industry but certain
aspects of dealing with coal is an industry and that is what is intended. That dealing
must be in, an industry in which there are employers and employees cooperating in
the production of material goods or material services. Similarly, cotton, textiles or
food stuffs or iron and steel, as the entries stand, are not industries. Therefore the
heading of the First Schedule and the words of Clause (vi) presuppose the existence
of an industry which may be notified as a public utility service, for special protection
under the Act.
27. Therefore when the list was expanded in the First Schedule and certain services
were mentioned, the intention could not be otherwise. The list was extended to 10
items by amendment of the Act by Act 36 of 1956 with effect from March 10, 1957.
The new items are (a) Banking, (b) Cement, (c) Defence Establishments, (d) Service
in hospitals and dispensaries, and (e) Fire Brigade Service. Later by notifications
issued under Section 40 of the Act nine more items were added. Section 40 gives to
governments the power to add to the Schedule. They are (a) Indian Government
Mints, (b) India Security Press, (c) Copper Mining, (d) Lead Mining, (e) Zinc Mining,
(f) Iron ore mining, (g) Service in any oil field, (h) Any service in, or in connection
with, the working of any major port or dock and (i) Service in the Uranium Industry.
It is easy to see that most of them are items in which an industry proper involving
trade, business, manufacture or something analogous to business can be found. It is
hardly to be thought that notifications can issue in respect of enterprises which are
not industries to start with. It is only industries which may be declared to be public
utility services.
28. Therefore to apply the notification, the condition precedent of the existence of an
industry has to be satisfied. If there is an industry which falls within the items named
in the First Schedule, then alone can it be notified to be classed as a public utility
service. The law does not work the other way round that every activity connected
with coal becomes an industry and therefore on notification that activity becomes a
public utility service. The same is true of all items including all the services
mentioned. They must first be demonstrated to be industries and then the notification
will apply to them. To hold otherwise would largely render useless all the definitions
in the Act regarding industry, industrial disputes etc., in relation to the scheduled
items. Parliament has not attempted to declare that notwithstanding the definitions of
'industry', 'industrial disputes', 'workman' and 'employer', every hospital is to be
regarded as an industry. All that has been provided is that an 'industry' may be
notified as a public utility service. That is insufficient to convert non-industries under
the Act to industries.
29. We now take up the individual cases.

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C.A. No. 1705 of 1969.
30. It is obvious that Safdarjung Hospital is not embarked on an economic activity
which can be said to be analogous to trade or business. There is no evidence that it
is more than a place where persons can get treated. This is a part of the functions of
Government and the Hospital is run as a Department of Government. It cannot,
therefore, be said to be an industry.
31. In this case the petitioner chose to be a Lower Division Clerk. The amount of
security which he had to furnish in the jab of a Store-keeper was also refunded to
him. He had applied for the post on May 31, 1962. On July 14, 1962 he again drew
attention to his application. His application was recommended on August 9. 1962. It
was only after November 26, 1962 when the scale of Store-keepers was raised to Rs.
130-300 that he changed his views. On December 12, 1962 he made a representation
but in forwarding it the Medical Superintendent said that the incumbents of the posts
of Store-keepers could not be given the upgraded scale of Rs. 130-300. In addition
there were certain matters pending against him which precluded his appointment in
that scale. On August 11, 1966 the Director General wrote :
With reference to your letter No. 1-20/62-Estt., dated the 4th Jan. 1966 and
subsequent reminder of even number dated the 24th May, 1966 on the
subject noted above, I am directed to say that a reference was made to the
Government of India in the Ministry of Health and Family Planning, New
Delhi who have stated that it was not intended that the revised scale of Rs.
110-131 (previous scale of Rs. 60-75) should be further revised to Rs. 130-
300 as all incumbents of the posts carrying the pay scale of Rs. 110-131
were prompted from Class IV and did not possess the requisite qualifications
prescribed for posts carrying pay scale of Rs. 130-300.
In view of the position stated above further action in the matter may kindly
be taken in the light of the above remarks and storekeepers concerned
informed accordingly.
In view of these facts it is hardly necessary to refer to the reports about the work of
Kuldip Singh Sethi and other matters which came in his way of promotion. Both on
the question of law decided by us and on the merits of his case, Kuldip Singh Sethi
was not entitled to the pay scale of store-keepers and the award of Rs. 914/- in his
favour was wrong. The appeal is allowed. The order is set aside but there will be no
order about costs.
C.A. No. 1781 of 1969.
32. The Tuberculosis Hospital is not an independent institution. It is a part of the
Tuberculosis Association of India. The hospital is wholly charitable and is a research
institute. The dominant purpose of the Hospital is research and training, but as
research and training cannot be given without beds in a hospital, the hospital is run.
Treatment is thus a part of research and training. In these circumstances, the
Tuberculosis Hospital cannot be described as an industry. The order of the Additional
Industrial Tribunal, Delhi on the preliminary point must be reversed. The reference to
the Tribunal under Section 10(1)(d) of the Industrial Disputes Act was incompetent.
The appeal is allowed but we make no order about costs.
C.A. No. 1777 of 1969.
33. The objects of the Kurji Holy Family Hospital are entirely charitable. It carries on
work of training, research and treatment. Its income is mostly from donations and

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distribution of surplus as profit is prohibited. It is, therefore, clear that it is not an
industry as laid down in the Act. The reference made by the State Government, Bihar
was thus incompetent. The appeal will be allowed. There will be no order about
costs, except in the first case (C.A. 1705 of 1967) in which the earlier order of this
Court shall be given effect to.

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